"There doesn't seem to be a hook that could drag Iran before the Security Council," non-proliferation expert Joseph Cirincione said Wednesday about the International Atomic Energy Agency (IAEA) report, a copy of which was obtained by AFP.

A diplomat to the Vienna-based IAEA, which is to review the Iranian nuclear program on September 13, went further saying: "I don't see how the United States can claim to take the issue to the Security Council (for possible sanctions against Iran)" since the report is "prudently positive for Iran."

In Tehran, foreign ministry spokesman Hamid Reza Assefi said: "The more time has passed, the clearer it has become that our nuclear programme and activities are peaceful and do not contravene international rules."

The report said it was "plausible" that Tehran was telling the truth in claiming uranium contamination found by IAEA inspectors had come from imported equipment and not because Iranian authorities were enriching uranium at the suspect sites as material for an atomic bomb.

The report also said that the IAEA's research into Iran's laser enrichment and uranium conversion activities had confirmed Tehran's reporting on these issues, and that these activities would now only be subject to routine monitoring.

But the US administration's top arms control official, undersecretary of state John Bolton, said Washington viewed "with great concern the IAEA report" that Iran will resume large-scale production of feed material for enriching uranium.

"We view with great concern the IAEA report that Iran is about to convert 37 tons of 'yellowcake' uranium into uranium hexafluoride gas, as well as Iran's recent announcement that it intends to test its gas centrifuges," Bolton said.

And a state department official who asked not to be named told AFP there were grounds for taking Iran to the Security Council since the Iranians were showing "a clear and compelling pattern of intent to get enrichment capabilities so that they can make fissile material for weapons."

He said the IAEA had in previous reports already shown "compelling proof of 18 years of Iranian violations" of the nuclear Non-Proliferation Treaty (NPT).

The official said Iran was now "demonstrating a willingness to withstand the current level of political pressure" from the international community and so the Security Council was needed in order to increase pressure on Tehran and keep it from mastering the nuclear fuel cycle.

A senior diplomat close to the IAEA said Iran's upcoming production of uranium hexafluoride would produce a "significant amount" of the gas, an amount that would apparently be enough to make enriched uranium that could produce at least one if not several atom bombs.

Iran had pledged to Britain, France and Germany last October to suspend uranium enrichment, despite enrichment being allowed under the NPT, in order to show the world community that its atomic intentions were strictly peaceful.

Iran then in February told the three European countries that it would voluntarily suspend the assembly and testing of centrifuges, the machines used to enrich uranium.

But in June, Iran said it would resume assembling and testing centrifuges since the so-called Euro-3 had failed to come through on a promise to get the IAEA to stop investigating Iran's nuclear programme.

Wednesday's IAEA report said the Iranians had taken off seals the IAEA had placed to monitor centrifuge manufacture and use at crucial sites.

Bolton said this and the uranium conversion were "further strong evidence of the compelling need to take Iran's nuclear programme to the Security Council."

The report made clear that while Iran has helped the IAEA clarify certain key issues, the investigation would continue.

The agency wants to find out why plutonium made by Iran may be in fact more recently manufactured than the 12-16 years of age Tehran claims.

"This implies that plutonium separation activities were carried out more recently than has been declared," a senior diplomat close to the IAEA said.

The US state department official said: "Undeclared plutonium separation is a serious safeguards violation and evidence of the failure of Iran to cooperate fully."

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